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Social Capital, Trust, and Firm Performance: The Value of Corporate Social Responsibility during the Financial Crisis
Author(s) -
LINS KARL V.,
SERVAES HENRI,
TAMAYO ANE
Publication year - 2017
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/jofi.12505
Subject(s) - corporate social responsibility , business , profitability index , financial crisis , social capital , value (mathematics) , debt , accounting , financial system , monetary economics , stock (firearms) , enterprise value , finance , economics , public relations , mechanical engineering , social science , machine learning , sociology , political science , computer science , engineering , macroeconomics
During the 2008–2009 financial crisis, firms with high social capital, as measured by corporate social responsibility (CSR) intensity, had stock returns that were four to seven percentage points higher than firms with low social capital. High‐CSR firms also experienced higher profitability, growth, and sales per employee relative to low‐CSR firms, and they raised more debt. This evidence suggests that the trust between a firm and both its stakeholders and investors, built through investments in social capital, pays off when the overall level of trust in corporations and markets suffers a negative shock.